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Bank Posted Mortgage Rates
What is a posted mortgage rate?
Posted mortgage rates are the rates put on websites and flyers by the big five Canadian banks. Posted rates are the standard by which banks start their negotiating, expecting consumers to negotiate them down.
Negotiating rates down increases customer satisfaction...?
The banks find that their customers are happier with rates if people have worked the rates down by half a percent, or somewhere thereabouts. The fact that often even these slightly discounted rates are a point or two above smaller lenders' averages doesn't hurt their profits either, but it's disingenuous towards their loyal customers either way.
Comparing the posted mortgage rates to the best of the lenders
Here's a comparison of typical posted rates vs typical broker rates. The differences should speak for themselves.
|Term||Posted Rate1||Broker Rates2||Posted Rates over Broker Rates|
|6 Month||3.14%||3.10%||0.04 percentage points|
|1 Year||3.14%||2.19%||0.95 percentage points|
|2 Year||3.04%||2.14%||0.90 percentage points|
|3 Year||3.65%||2.24%||1.41 percentage points|
|4 Year||4.39%||2.49%||1.90 percentage points|
|5 Year||4.64%||2.39%||2.25 percentage points|
|7 Year||5.30%||3.44%||1.86 percentage points|
|10 Year||6.10%||3.84%||2.26 percentage points|
|25 Year||8.75%||99.99%||-91.24 percentage points|
1 Posted rates are based off of RBC's closed mortgage rates.
You don't need to work down or negotiate better rates from a broker
Brokers aren't in the business of wheeling and dealing their clients, so it's only natural that when enlisted they're forthcoming about what rates they have, and what you can qualify for. Of course, that's not to say that all banks are disingenuous or that all brokers are saints, but the relationship between a broker and his or her clients is far healthier than a single person versus the Bay Street thugs. (Sorry about this. I needed a catchy line.)